Key provisions that currently protect some unregistered security
interests will come to an end on 30 January 2014. This affects
security interests such as:
retention of title arrangements;
equipment and finance leases;
mortgages over property (other than land); and
charges given by individuals.
Businesses that have been relying on the transitional provisions
for these security interests need to take action or risk
automatically losing their rights as a secured creditor from 30
What do you need to do?
Identify all the security interests held by your
business (if you haven't already).
Document each security interest, including those that
have been subject to the transitional provisions.
Implement steps to perfect your security interests:
before 30 January 2014 for security interests subject to the
transitional provisions; and
ASAP for all other security interests.
How do the transitional provisions work?
Although the PPSA started on 30 January 2012, security interests
that existed prior to this date are covered by the legislation.
Some pre-existing security interests migrated to the new PPS
Register (such as fixed and floating charges registered with ASIC),
and therefore became perfected from commencement of the PPSA.
However, many interests that were not previously registrable
(such as retention of title arrangements and some leases) were
deemed to be protected for two years after the start date.
This measure was a trade-off, designed to allow businesses time
to adjust to the new procedures for taking security over personal
property and perfect their interests in accordance with the
There is some conjecture about whether agreements made before 30
January 2012 are protected if new supplies have been made after the
commencement of the PPSA. There is no guidance by the courts on
this issue, so the safe option is to register these
What happens if you do nothing?
Under the transitional rules, a security interest that existed
prior to 30 January 2012 is deemed to be perfected until 30 January
On and from 30 January 2014, the deemed perfection ceases.
Unless you have perfected these security interests by taking the
appropriate steps under the legislation, you will become an
unsecured creditor from 30 January 2014.
This means you could lose goods that you own but which are held
by a third party, if the other party becomes insolvent.
Cooper Grace Ward has a specialist PPSA team that can assist you
in identifying, documenting and implementing procedures to deal
with the PPSA, such as:
advice on how to perfect your security interests;
registration manuals; and
tailored training for you and your staff on how to use the new
register with confidence.
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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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